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Shall We Play a Market Timing Game? (2018)

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Re: Shall We Play a Market Timing Game? (2018)

#41

Post by aguyfromnb »

vidanay wrote: post #37
Klinky wrote: post #26

Earlier quoted context omitted.

I'd expect percentage losses as deep as those seen in 2007/2008. This isn't just paper money drying up, it's the inability to physically work. It's not just a matter of injecting a ton of capital into the economy, literally that capital cannot do anything if people can't work. We'll also see hyperspecialization towards COVID-19 in the health sector, which could leave those industries vulnerable when COVID-19 finally…

The big difference is that 2008 was a systemic recession. This one will likely be situational.

>The big difference is that 2008 was a systemic recession. This one will likely be situational.

"Systemic"; what does that even mean? That the crisis was related to the financial system? Yes, it was one type of financial crisis.

We are now in another. If you believe that the unravelling we are seeing is simply because of the Coronavirus, I think you will be disappointed. While this may not be the same as 2008 (no two crises are the same), there are a number of "systemic" issues in the world that will come under pressure:

  - Privately held companies with ridiculous valuations (WeWork, SpaceX)
  - China having taken on more debt in 10 years than anyone, ever
  - Negative interest rates around the world going *into* recession
  - The shale industry blowing up
  - Housing bubbles that didn't implode in 2008 (Canada, Australia) coming under pressure
  - Fiscal and monetary stimulus in the US like we've never seen
  - Risk Parity unwinding
These are off the top of my head. Maybe they all mean nothing, but I doubt it.

Re: Shall We Play a Market Timing Game? (2018)

#42

Post by slothtrop »

lend000 wrote: post #35

The "Buy and hold ETF" strategy of today is good advice until it isn't. Eventually, ETF holders will probably be exposed to a black swan like the NIKKEI 225 lost decade event (although it should probably be called the lost decades ) [0]. My opinion is that buying and holding the index is better than picking stocks and timing the market unless you are a professional (you need to be doing it full time to gain a consist…

You can already do this with ETFs, e.g. with Aggregate Bond Index ETFs, and the All Cap I invest in includes basic materials, oil & gas. The REIT ones can be more expensive.

Only going for equities is risky I agree, but I don't see this as an ETF problem.

Re: Shall We Play a Market Timing Game? (2018)

#43

Post by qihqi »

c06n wrote: post #8

Generally, in markets that were part bearish (like the 80s), I made very good returns, between 10 % and 30 % above the index. As a very simple rule, after 2 days of a falling index, sell for exactly 1 day. This works mainly because there are enough consecutive 3 days of a falling index. However, if the market trend is overwhelmingly bullish, that does not work anymore, because there are not enough triplets of falling…

You can beat falling markets by not buying anything.

I don't get why is beating the market a goal, isn't making money the goal? I am much happier making 20% while market is up 30%, than losing 5% when the market loses 20%.

Re: Shall We Play a Market Timing Game? (2018)

#44

Post by quickthrower2 »

pembrook wrote: post #24
czbond wrote: post #12

Earlier quoted context omitted.

Technical analysis has validity - it is just patterns and data. It isn't perfect, because outcomes are still variable, and also consist of independent human decisions. A pandemic is an edge case... However, markets react much more quickly than in the past (algorithms, global data, instant analysis of that data) - that technical analysis short term timelines have compressed. If you want statistical breakdowns of each…

That book is essentially a collection of newspaper horoscopes. Trading off data and patterns is a valid strategy, but the book you referenced doesn’t show you how to do that. (drawing pictures over charts and making subjective conclusions based on what you drew is not a data driven strategy). Read the recent book on Rentech (the man who solved the market is the title I believe) to better understand how difficult it i…

I wonder how the firm did this year?

Re: Shall We Play a Market Timing Game? (2018)

#45

Post by lend000 »

slothtrop wrote: post #42
lend000 wrote: post #35

The "Buy and hold ETF" strategy of today is good advice until it isn't. Eventually, ETF holders will probably be exposed to a black swan like the NIKKEI 225 lost decade event (although it should probably be called the lost decades ) [0]. My opinion is that buying and holding the index is better than picking stocks and timing the market unless you are a professional (you need to be doing it full time to gain a consist…

You can already do this with ETFs, e.g. with Aggregate Bond Index ETFs, and the All Cap I invest in includes basic materials, oil & gas. The REIT ones can be more expensive. Only going for equities is risky I agree, but I don't see this as an ETF problem.

That's a good point, I'm really referring to stock market indices.

Re: Shall We Play a Market Timing Game? (2018)

#46

Post by thekyle »

raphaelrk wrote: post #32

I don't have much experience in the market, but "invest in index funds" seems like a way to inflate the values of all the companies in the index fund, deserved or not, and I find it worrying that it's touted as an easy/simple way to make money. If there's a lot more index fund money than hedge fund / active money it would probably mess with prices, right? Is there any good analysis of when it would stop making sense…

> If there's a lot more index fund money than hedge fund / active money it would probably mess with prices, right?

No, assets under management is irrelevant to price discovery. Trading is what sets prices not holding stocks. According to a 2018 Vanguard paper index funds only made up around 5% of trading volume despite holding about 50% of assets. So active managers are still responsible for 95% of price discovery even if they hold only 50% of assets.

https://personal.vanguard.com/pdf/ISGBEL.pdf

Re: Shall We Play a Market Timing Game? (2018)

#47

Post by lonelappde »

remote_phone wrote: post #31
heartbeats wrote: post #30

Earlier quoted context omitted.

Agreed. I read about the coronavirus and decided to pull some of my money out - that's probably earned me 10% so far.

I read about coronavirus and bought puts when the market kept making new highs. I’m currently up $100k, with $80k already booked profits and riding the last $20k as a hedge against my new long positions. I also bought Gilead and Moderna and am up $15k and $5k, respectively. I believe we are near a short term bottom and will bounce in 1-2 weeks. Most of the bad news is out and I expect better news in the coming weeks…

How is it possible that in 2 weeks we'll have news that quarantine is working? The general publicly isn't even taking it seriously yet.

It'll be at least 2 weeks evem before testing capacity is ramped up enough to measure population-level success at quarantine

Re: Shall We Play a Market Timing Game? (2018)

#48

Post by remote_phone »

lonelappde wrote: post #47
remote_phone wrote: post #31

Earlier quoted context omitted.

I read about coronavirus and bought puts when the market kept making new highs. I’m currently up $100k, with $80k already booked profits and riding the last $20k as a hedge against my new long positions. I also bought Gilead and Moderna and am up $15k and $5k, respectively. I believe we are near a short term bottom and will bounce in 1-2 weeks. Most of the bad news is out and I expect better news in the coming weeks…

How is it possible that in 2 weeks we'll have news that quarantine is working? The general publicly isn't even taking it seriously yet. It'll be at least 2 weeks evem before testing capacity is ramped up enough to measure population-level success at quarantine

Italy and the rest of Europe will be 4 weeks into their quarantine in 2 weeks. If we see results over the next week or two then the US markets will skyrocket because it means it will work here too.

Re: Shall We Play a Market Timing Game? (2018)

#49

Post by valuearb »

Majromax wrote: post #20

> Update: Added a Monte Carlo mode which lets you play with data that is randomly generated from the daily returns of the S&P500. The probability of a daily return being picked is the same probability/frequency that it occurred in the last 68 years. This mode is rigged. Any proposal for market timing requires correlated returns. "Technical" traders infer short-term trends form patterns like the shave-and-a-haircut an…

Fundamental investing doesn’t require mean reversion.

And technical patterns aren’t predictive.

Re: Shall We Play a Market Timing Game? (2018)

#50

Post by valuearb »

remote_phone wrote: post #31
heartbeats wrote: post #30

Earlier quoted context omitted.

Agreed. I read about the coronavirus and decided to pull some of my money out - that's probably earned me 10% so far.

I read about coronavirus and bought puts when the market kept making new highs. I’m currently up $100k, with $80k already booked profits and riding the last $20k as a hedge against my new long positions. I also bought Gilead and Moderna and am up $15k and $5k, respectively. I believe we are near a short term bottom and will bounce in 1-2 weeks. Most of the bad news is out and I expect better news in the coming weeks…

I was playing blackjack and realized the market never split tens, so I started doing it and made thousands of dollars. Lesson: don’t pay attention to probabilities, math is just a scam successful players try to trick you with.
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